The Company

Incorporated in April 2016, NCB Financial Group Limited (“NCBFG” or “the Company”) is a financial holding company and currently has three subsidiaries National Commercial Bank Jamaica Limited (“NCBJ” or “the Bank”), NCB Global Holdings Limited (NCBGH) and Clarien Group Limited (Clarien). In March 2017, under a Scheme of Arrangement, the pre-existing shares in NCBJ were transferred en-bloc to NCBFG, which in turn issued, on a one for one basis, shares in NCBFG to the previous shareholders of NCBJ.

This resulted in NCBJ becoming a wholly owned subsidiary of NCBFG.

The Group operates within the financial services industry, including banking, insurance and investment management, mainly in the Caribbean. Our organisation operates its business through seven segments offering a wide range of financial solutions to its customers, including loans and investments, deposits, payment services, credit cards, structured finance, trade finance, foreign exchange, wealth management, insurance (general and bancassurance), pension fund management, annuities and trust services. In addition, there are self-service options at financial kiosks and intelligent ABMs in our ‘Bank on the Go’ locations as well as online.

NCB Financial Group Limited trades under the symbol “NCBFG” on the Jamaica Stock Exchange and Trinidad & Tobago Stock Exchange. The Group is the largest financial services organisation in Jamaica measured by profitability and total assets.

Clarien Group Limited.

In December 2017, NCBFG acquired a 50.1% majority stake in Clarien Group Limited incorporated in Bermuda, owner of Clarien Bank Limited (CBL). The remaining shareholding is held by funds managed by Portland Private Equity (17.92%) and Edmund Gibbons Limited (EGL) (31.98%). CBL is licensed by the Bermuda Monetary Authority (BMA) to conduct banking, investment and trust business and is one of the largest independent, privately-owned integrated financial services organisations in Bermuda.

This acquisition is aligned with our regional growth strategy and has extended our footprint to one of the world’s premier financial jurisdictions. Bermuda is respected as a stable, sophisticated jurisdiction; well equipped to meet the needs of international high net worth individuals and institutional clients, which complements our wealth management operations. Clarien provides personal, commercial, private and corporate banking products and services to individuals and corporations, along with a full range of investment products and brokerage services through Clarien Investments Limited.

NCB Global Holdings Limited (NCBGH) is a holding company incorporated in Trinidad and Tobago which currently owns 29.99% of the issued shares of Guardian Holdings Limited (GHL). The acquisition was completed in May 2016 in Trinidad & Tobago and is accounted for as an associated company in the consolidated results of NCBFG.

The Guardian Group is the largest indigenous financial services and insurance group in the Caribbean; serving markets in 21 countries, including the English and Dutch Caribbean, Trinidad & Tobago, Barbados, Jamaica, Curacao, Aruba, St. Maarten and Bonaire. GHL provides services in life and health insurance, asset management, trust services and general insurance.

National Commercial Bank Jamaica Limited (NCBJ) is a licensed commercial bank (deposit taking institution – DTI) incorporated in Jamaica, which is regulated and supervised by the Bank of Jamaica (BOJ) and currently has eleven subsidiaries. NCBJ offers banking services to individual consumers, small and medium sized enterprises (SMEs), large corporations and government institutions.

One of its largest subsidiaries, NCB Capital Markets Limited (NCBCM), a licensed securities dealer, investment advisor and unit trust management company regulated and supervised by the Financial Services Commission (FSC), currently has five subsidiaries. Advantage General Insurance Company Limited (AGIC) is a licensed general insurance company regulated and supervised by the FSC, and is one of the subsidiaries of NCBCM. Another major subsidiary of NCBJ is NCB Insurance Company Limited (NCBIC), a licensed life insurance company and an investment and pension administrator regulated and supervised by the FSC.

NCB (Cayman) Limited (NCBKY), one of the wholly-owned subsidiaries of NCBJ, established in 1992 to offer banking and trust services from the Cayman Islands, currently has one subsidiary, NCB Trust Company (Cayman) Limited. Over the years, NCBKY has grown to become a highly reputable private banking and wealth management service provider, offering a suite of services to high net worth individuals and corporate entities. NCBKY is regulated and supervised by the Cayman Islands Monetary Authority.

NCB Global Finance Limited (NCBGF) is a Trinidad and Tobago based financial institution, licensed and regulated by the Central Bank of Trinidad &Tobago. The company is authorised to conduct business as a merchant bank, finance house/company, confirming house/acceptance house, leasing corporation, mortgage institution, trust company, unit trust and foreign exchange dealer. NCBGF was acquired in December 2013 by NCBCM.

NCBCM incorporated a wholly owned subsidiary located in Barbados in May 2015. This subsidiary, NCB Capital Markets (Barbados) Limited (NCBCMB), received a securities licence from the Barbados Financial NCBFG Services Commission on September 22, 2015. NCBCMB is our investment banking hub for the Eastern Caribbean.

NCBJ and its subsidiaries (the banking group) are Jamaica’s largest and most profitable banking and financial services group, based on net profit and total assets. NCBJ and its subsidiaries primarily operate in Jamaica, but also offer services in the Cayman Islands, Barbados, Trinidad & Tobago and the United Kingdom. In Jamaica, NCBJ and its subsidiaries serve their clients through 37 branches and over 305 ATMs and financial kiosks island-wide, with its head office located in Kingston and a regional office in Montego Bay. The banking group currently provides financial services to just over a million customers.

2018 Performance Overview
The financial performance for the 2018 financial year was underpinned by our current NCB 2.0 by 2020, faster | simpler | stronger strategic plan. This plan is focused on the NCB Group “setting the ‘BAR’ in the financial services industry”.

To accomplish this we have concentrated on three themes (BAR), which are driven by six initiatives:
• Building a world-class digital experience 1. Develop distinctive digital capabilities
• Accelerating regional expansion 2. Expand in priority markets
• Reinventing our core business 3. Enhance sales and service excellence 4. Focus on payments innovation 5. Develop and engage our people 6. Improve customer experience and optimise efficiency

For the year, we continued to develop an ecosystem of innovation to fuel the digital transformation. The components included agile labs and partnerships with ecosystem players and fintechs to create a foundation for automated interactions. Several initiatives were also pursued to enhance our core business to facilitate serving our customers in a faster, more efficient manner, as well as simplifying our processes, which will ultimately lead to a stronger financial group.

The initiatives completed to date have led to another record performance for 2018; the achievement of the highest net profit in the Group’s history. The Group recorded net profit attributable to stockholders of the company of $28.0 billion, supported by our asset base of $978.6 billion, up by $284.9 billion or 41% over the prior year resulting in a return on average assets of 3.3%. Equity attributable to stockholders of the company increased to $130.0 billion, an increase of 12% or $14.0 billion, with return on average equity of 22.7%.

In December 2017, we completed the acquisition of a 50.1% majority stake in Clarien making that company our newest subsidiary and strengthening our position regionally. Additionally, we launched an offer and take-over bid to all shareholders of GHL; the offer, if successful, would have resulted in NCBFG acquiring a controlling interest in GHL.

At February 2018, there were terms and conditions of the offer, which remained outstanding and in
accordance with the provisions of the Securities Industry (Take-Over) ByLaws, 2005, of Trinidad & Tobago, NCBGH allowed the offer to lapse. A group of minority shareholders of GHL lodged complaints with the Trinidad and Tobago Securities & Exchange Commission (“the Commission”) and the staff of the Commission commenced a hearing.

Subsequently, the staff and NCBGH agreed to enter into settlement discussions. In November 2018, a settlement was approved by an Order of the Commission. Under the approved settlement, and agreements with key selling shareholders, we will make a revised take-over bid to seek to acquire a majority stake of GHL.

Our regional expansion resulted in a new geographic revenue stream, Bermuda, which earned $5.7 billion in operating revenues for the financial year. This compensated for the reduction in revenues earned from our Barbados operations, primarily due to lower gains from investment activities earned in the current year, due to fewer trading opportunities given the challenging Barbados operating environment.

We anticipate greater diversification away from revenues generated in Jamaica, as we execute on our integration activities with Clarien and other crossborder initiatives geared towards strengthening our regional footprint.

With global growth providing a solid base for the local economy, Jamaica’s macroeconomic fundamentals remained relatively strong throughout the financial year, buoyed by continued fiscal discipline on the part of the Government of Jamaica (GOJ), low inflation and the Bank of Jamaica’s (BOJ) maintenance of its accommodative policy stance.

In particular, the BOJ’s lowering of interest rates facilitated a favourable environment for an expansion in private sector credit and investment.  Under Jamaica’s Economic Reform Programme, BOJ also moved to an Inflation Targeting Lite framework with monetary policy now focused on achieving a medium-term inflation target of 4% to 6%.

With the shift in policy focus, inflation, which fell to a low of 2.8% in June, gradually increased to 4.3% in September 2018. GDP growth accelerated during the second quarter of 2018 to the highest level (2.2%) seen in recent history, aided by a resurgence of output in the Mining and Quarrying industry and the favourable policy environment. Concurrently, the GOJ, for the first time in four years, ran a fiscal surplus of $8.7 billion for the 2017/18 fiscal year. There are also convincing signs that debt-to-GDP could sink below the 100% mark by the end of the 2018/19 fiscal year.

Aided by the strengthening domestic economy, low interest rates and progress on the fiscal front, local stocks rallied. Meanwhile GOJ bonds, despite being adversely impacted by the general sell-off in emerging markets, fared better than most EM bonds. Growth across all the major stock market indices remained robust, propelled by strong JMD liquidity and a drove of new listings.

The progress made on the local economic front during the financial year, was also recognised by two credit rating agencies, (Standard & Poor’s (S&P) and Moody’s), upgrading their outlook on the country’s credit rating from stable to positive.

Furthermore, notwithstanding the increase in perceived risk, which caused general depression in the value of emerging market credits, Jamaican global bonds traded at lower spreads along the yield curve relative to most of its peers reflecting its strengthening fundamentals.

Michael Lee-Chin Chairman NCB Financial Group Limited

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